Aniket Pujari
In a letter to MTNL, disclosed in an exchange filing by the telecom company, SBI stated that the loan instalment and interest payment for the term loan, which became overdue on June 30, 2024, remained unpaid for over 90 days, resulting in the downgrade to “sub-standard” effective September 28, 2024.
CNBC-TV18 had previously reported that banks, including SBI, were set to downgrade the MTNL account in the September quarter. As of September 30, 2024, SBI’s total outstanding exposure to MTNL stood at ₹325.52 crore, with ₹281.62 crore overdue. SBI has demanded immediate payment to regularize the account.
Earlier, Union Bank of India, Bank of India, and Punjab National Bank had also downgraded MTNL’s account to the non-performing asset category. MTNL had proposed a repayment plan to settle approximately 40% of its outstanding dues, indicating a 60% haircut, but its lenders rejected this in June.
While lenders have shown a willingness to explore restructuring options, including a debt-to-equity conversion, they have firmly ruled out accepting a haircut, as indicated by multiple banks to CNBC-TV18.
SBI has now warned MTNL that if the overdue payments are not cleared, it may have to take legal action to recover the dues. “In case of default of payment within the period stipulated above, the bank will be constrained to institute legal proceedings for the recovery of the entire loan along with interest and take such other steps as may be available to the bank, including enforcement of securities, without any further reference to you in the matter and entirely at your costs and consequences,” the letter stated.
SBI has raised concerns about MTNL’s ability to meet its financial obligations, particularly in light of media reports suggesting that the government may intervene to clear MTNL’s dues. The bank is awaiting clarification from MTNL regarding the status of the term loan facility, given these reports and the Department of Telecommunications (DoT) statement that MTNL would avoid default.
Additionally, SBI has sought updates from MTNL on its land monetisation plan, which was recently submitted with year-wise cash flow projections. MTNL has signed a memorandum of understanding (MoU) with the National Buildings Construction Corporation (NBCC) to jointly develop a 13.88-acre land parcel on Pankha Road, New Delhi, into residential and commercial spaces. SBI has requested details on the MoU and whether the proceeds from this project will be used to settle the outstanding loan.
The bank also noted that MTNL has yet to respond to SBI’s earlier letter, dated August 14, 2024, regarding amounts receivable from Bharat Sanchar Nigam Limited (BSNL) under the “other financial assets” category.
SBI has urged MTNL to prioritise the overdue payments, warning that legal proceedings for loan recovery could be initiated if the default continues.
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